The boss of the Sony Playstation has been axed as sales fail to hit expectations. The move comes as Sony fights to establish the PS3 in the market up against the Xbox 360 and Nintendo Wii.
Sony’s Ken Kutaragi, developer of the PlayStation game consoles, will retire in June after production stumbles forced the company to slash shipment targets.
Kutaragi, 56, who stepped down from day-to-day management in December, will relinquish the role of chief executive officer of Sony Computer Entertainment Inc. Kazuo Hirai, 46, president of the unit, will take over, Sony said today in a statement.
The decision “is likely an indication Sony corporate isn’t satisfied with the initial success of the PS3,” Evan Wilson, an analyst at Pacific Crest Securities in Portland, Oregon, said in an interview. Wilson rates Sony shares “sector perform” and doesn’t own them.
Production delays have left Sony in third place in worldwide sales of the newest generation of consoles behind Nintendo Co.’s Wii and Microsoft Corp.’s Xbox 360. Hirai, with a background in computer software, may help Sony’s ties with video-game publishers and accelerate the introduction of new titles and sales of the PlayStation 3.
Hirai is “probably best known for his relationships with the U.S. video-game publishers,” Wilson said.
Sony American depositary receipts fell $1.02 to $54.20 at 4:01 p.m. in New York Stock Exchange composite trading. They have risen 27 percent this year. Each ADR is worth one ordinary share. The statement was made after the close of trading in Tokyo.
Hirai was named president of the unit in December after Kutaragi gave up some responsibilities. Kutaragi will become a “senior technology adviser” to Sony Chairman Howard Stringer, the company said in a regulatory filing.
Sales Lag
PlayStation 3 continues to trail Nintendo’s Wii and Microsoft’s Xbox 360 in sales.
Sony has sold 501,000 PlayStation 3s in the U.S. this year through March, compared with Wii sales of 1.03 million, according to market researcher NPD Group Inc., based in Port Washington, New York. Microsoft sold 721,000 Xbox 360 players.
PlayStation 3 also is behind Wii in Japan, where Sony has sold 604,331 PS3s to Nintendo’s 1.47 million Wii players in the first two months of 2006, according to researcher Enterbrain.
Kutaragi, a 30-year Sony veteran, led the team that developed the PlayStation in 1994, giving Sony the biggest share of a $20 billion industry. More than 200 million PlayStation and PlayStation 2 consoles have been sold worldwide, the company said.
Production Snag
Production delays and parts shortages for the PlayStation 3 prompted Sony to cut 2006 shipment targets by half last September. The console went on sale in November.
Hirai joined CBS/Sony Inc., now Sony Music Entertainment Japan, in 1984, at the same time that Sony CEO Howard Stringer was an executive producer at CBS News.
After joining Sony Computer in 1995, Hirai oversaw the U.S. introduction of the PlayStation, PlayStation 2 and the PlayStation Portable game players. He also led Sony into online game-playing in 2002, gaining more than 2 million users, according to Sony Computer’s Web site. Before becoming global president, Hirai was president of Sony Computer America.
